Lawrence Berkeley National LaboratorySales & Use Tax Guidelines
LBNL’s Tax Status Is LBNL exempt from tax? Answer: It depends on the type of tax, sponsor and category of purchase TAX EXEMPT TAX EXEMPT The focus of this briefing is sales and use tax compliance at LBNL.
Table of Contents General Overview • Sales Tax vs. Use Tax • Determining Taxable Transactions • Sponsors & Funding Sources Subject to Tax • Tangible Personal Properly • LBNL Tax Payment Mechanism Roles & Responsibilities • Requisitioner Roles & Responsibilities • Resource Analyst Roles & Responsibilities • Budget Office Roles & Responsibilities • Procurement Office Roles & Responsibilities • Accounts Payable Roles & Responsibilities • Tax Accountant Roles & Responsibilities Attachments • Listing of Materials, Fixtures, Machinery & Equipment • Sales and Use Tax Guidelines - Review Questions
Sales Tax vs. Use Tax Sales Tax • Is charged on invoice by the vendor • Rate is determined by the point of delivery • Payment is collected and forwarded to the State of California Board of Equalization by the vendor or retailer Use Tax • Is accrued by the purchaser if no sales tax charged on invoice; however, the purchase is subject to sales/use tax regulations • Rate is determined by the final destination where the good will be consumed or utilized • Payment is forwarded to the State of California Board of Equalization by the purchaser Generally speaking, LBNL fulfills its tax responsibilities via the use tax process.
Determining What Transactions areSubject to Sales and Use Tax STEP 1 STEP 2 Is the purchase for a sponsor or funding source that is subject to tax? Is the purchase tangible personal property? Yes Yes Sales/use tax due No No No sales/use tax due No sales/use tax due
Step 1: Is the Purchase for a Sponsor or Funding Source that is Subject to Tax? A listing of Materials, Fixtures, Machinery & Equipment can be found in Attachment I.
Step 2: Is the Purchase Tangible Personal Property? Tangible Personal Property (TPP) can be: • Seen • Weighed • Measured • Felt or Touched • Perceptible to the senses • Examples of TPP include: • Books • Computers • Equipment • Furniture • Office Supplies • Machinery • Materials
LBNL Taxable Transactions STEP 1 STEP 2 Is the purchase for a sponsor or funding source that is subject to tax? Is the purchase tangible personal property? Yes Yes Sales/use tax due
LBNL Tax Payment Mechanism • Because the majority of LBNL’s purchases are not subject to sales tax, the Laboratory presents our resale certificate to vendors for most transactions. • To properly collect and remit tax due on LBNL taxable transactions, the STX burden rate has been established in the system. The STX burden is applied to the project id for the taxable sponsors/funding sources identified on slide 7 for the following TPP resource categories:
LBNL Tax Payment Mechanism • Rental Contracts • The contract will include articles/clauses requiring the vendor to bill LBNL for use tax on the invoice. • STX burden will not be applied to rental project ids. • Construction Contracts • The contract will include articles/clauses addressing that the vendor will charge sales/use tax on materials and fixtures, and accept LBNL’s resale certificate to exempt sales/use tax on equipment and machinery, since title on equipment and machinery pass to the U.S. DOE. • Generally, the sales tax will be included in the construction contract pricing or on the invoice, not by STX burden code. “In this world nothing can be said to be certain, except death and taxes.” Benjamin Franklin Questions? Please contact the Controller’s Office Tax Accountant, Yvonne Deshayes at x6280.
Attachment I: Materials, Fixtures, Machinery and Equipment Items usually regarded as fixtures: Items usually regarded as materials: Items usually regarded as machinery and equipment: Air conditioning units Awnings Burglar alarm and fire alarm fixtures Cabinets, counters, and locks (prefabricated) Electric generators (affixed to and accessory to a building, structure or fixed works) Elevators, hoists, and conveying units Furnaces, boilers, and heating units Lighting fixtures Plumbing fixtures Refrigeration units Signs Telephone switchboards and instruments Television antennas Transformers and switchgear Vault doors and equipment Venetian blinds Fixtures and materials as defined in Regulation 1521 Wiring, piping, etc., used as a source of power, water, etc. for machinery and equipment Radio transmission antennas Large tanks (i.e., over 500 barrel capacity) Fire alarm systems Street light standards Cooling towers other than small prefabricated cooling units. Asphalt Bricks Builders’ Hardware Caulking material Cement Conduit Doors Ducts Electric wiring and connections Flooring Glass Gravel Insulation Lath Lead Lime Linoleum Lumber Macadam Millwork Mortar Oil Paint Paper Piping, valves, and pipe fittings Plaster Power poles, towers and lines Putty Reinforcing mesh Roofing Sand Sheetmetal Steel Stone Stucco Tile Wall coping Wallboard Wallpaper Wall-to-wall carpeting (when affixed to the floor) Weather stripping Windows Window screens Wire netting and screen Wood preserver Drill presses Electric generators (unaffixed, or, if affixed, which meet the requirements of Regulation 1521) Lathes Machine tools Moving parts of cranes Printing presses
Attachment II: Sales and Use Tax Guidelines - Review Questions